Are the funeral bells tolling at National RV?
The 2006 results are in for National RV and the news is not good. The company posted a 14.3 percent decline in net sales and a net loss of $24.3 million. Since 2001, this company has lost nearly $93.4 million on $2.16 billion in sales.
National RV sold off its cash cow, Country Coach, a few months ago in a sale valued at $38.7 million. Yet, after $24.5 million in outstanding bills were paid, the company netted only $14.2 million to fund current operations. According to its annual report, that amount won’t even cover its general and administrative expenses. The annual report data posted at the Securities and Exchange Commission’s website yesterday noted that National RV Holdings entered into an agreement with Wells Fargo to reduce its credit facility from $40 million to $15 million.
“While we do not anticipate any events of default, in such an event, the lender could restrict our borrowings under the line of credit which could restrict or limit our ability to react to changes in market conditions and acquire properties or businesses and if we were unable to obtain a waiver on the line of credit from Wells Fargo Bank, the underlying assets could be called by Wells Fargo Bank. If our debt were to be accelerated, there is no assurance that we would be able to repay it. There are no guarantees that we could obtain sufficient financing resources as an alternative to the line of credit, which could have a material negative impact on our financial position, results of operations and cash flows,” the report read.
In addition, provisions in National RV’s charter documents and in Delaware law (where it is technically incorporated) make it difficult for a third party to acquire the company. As a result, it could depress the company’s sale of its common stock. While the stock briefly fell to $1.96 per share 12 days ago, it is currently trading at $2.15 per share — well below its $5.97 share price one year ago and considerably less than its all-time high of $33.67 posted in 1998.
“Certain provisions of our Certificate of Incorporation and By-laws, as well as Delaware corporate law, may be deemed to have anti-takeover effects and may delay, defer or prevent a takeover attempt that a stockholder might consider in its best interest. Such provisions also may adversely affect prevailing market prices for the common stock. Certain of such provisions allow the company’s board of directors to issue, without additional stockholder approval, preferred stock having rights senior to those of the common stock. In addition, we are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law, which prohibits us from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.”
Although the company appears to be handcuffed to some extent in its ability to get out from under its current situation, National RV noted that it has a plan for returning to profitability that includes seven points:
- New product and floor plan introductions in 2007
- New dealer additions to fill open market areas or replace under-performing dealers
- Decreases in overall sales incentives by tailoring programs that provide the maximum value to the company
- Reduction of material and related obsolescence costs
- Improvement of manufacturing efficiencies
- Further reductions of manufacturing and other overhead costs
- Decreases in the costs of warranty
The last point should concern dealers to the point they may want to set aside some money to cover warranty repairs in case of a company default or in case claim approvals are tightened.
What if the firm’s seven-point plan fails? The report suggests that if management is unable to achieve its operational profitability plan or unforeseen events occur and its existing line of credit is insufficient to allow National RV to meet its obligations, the company may need to implement alternative plans that could include:
- Long-term financing collateralized by real estate
- A possible sale and leaseback transaction involving its Perris, Calif. facilities
- Pursuit of several strategic opportunities,
- Obtaining additional debt financing
- Additional reductions in operating costs
- Deferral of capital expenditures
- Deferring the introduction of new products
- Scaling back its operations to further reduce its working capital
This weekend, I had a chance to talk with several people representing a broad spectrum of firms involved in the RV industry. The overall consensus was that National RV isn’t likely to survive the year without a dramatic change in leadership that signals to stockholders, creditors and dealers that the firm is serious about completing a turnaround. Perhaps the company even agrees. According to its annual report, “The company has performed an evaluation of its ability to continue as a going concern and believes it has sufficient financial resources to fund its operations through at least March 2008.” I must commend National RV shareholders for their patience and faith in the company. Bradley Albrechtsen has served as president and CEO of National RV Holdings, and Doy Henley has served as its chairman since September 2001 — and the company has yet to turn a profit. Since both are still in place following January’s annual shareholder meeting, I can only assume that shareholders are pleased with the direction of the company. In fact, Henley was re-elected to his position on the board at that gathering.
Ironically, the company’s 2001 Annual Report noted, “2001 was a year of transition, as (the) company took decisive action to secure National RV Holdings’ future performance.” I wonder, did Albrechtsen and Henley get the memo?
June 28th, 2007 at 10:45 am
Facts.. Just look at the facts. Don’t fall for the hype and forward looking statments made by NRV and the board cronies. Look at the finicial statments, look at the current stock prices. NRV would like to blame all their woes on outside circumstances but thats not entirely true. Almost any other company that would have the resent history of Non-Profitability would hold the president responsible and replace him.
Wake up people
June 3rd, 2007 at 7:34 pm
We now see the reason that Dave Humphreys stepped up with some comments in defense of National RV … as he takes control of the struggling manufacturer, it is now his responsibility to get them back to the level of quality and confidence they once enjoyed in the RV industry. This will be an interesting company to watch between now and the time we all go back to Louisville in November.
April 26th, 2007 at 3:20 pm
Mr. Dave Humphreys–
I have been in RV sales for a number of years and I have sold many National products. Your factory rep in the northwest back in 2003 (Pete) educated me on the differential advantages of your product line and in the end I studied your product and became a walking encyclopedia on “Nationals”.
I am currently the top salesman at LaMesa RV (companywide) and I am optimistic that Mr. Kimbrall will carry your baton.
You produce an exceptional product, but the sales forces at large are not properly educated nor motivated to my level of excitement and enthusiasm over your product.
There is a solution and I can provide it. It is not for a public forum.
You will succeed! “If you can conceive it and believe it, you can achieve it.” (quote from Napoleon Hill inspired by Andrew Carnegie)
April 24th, 2007 at 2:35 pm
I started in the RV industry in March of 1963. I have been in every concievable end of the business you can imagine. When National first started operations and through it’s growing years, it was operated by a marginal at best management team. Then a short number of years ago, a few so called know it alls from a retail dealership in Junction City, Oregon took over management.
It went from the dumpster into the toilet as far as marketing and quality. I feel it will never recover with the higher gas prices and the lack of confidence in the company. Services to be held in the near future.
April 18th, 2007 at 4:35 pm
I don’t think anybody wishes National RV ill will or call for what might be a premature death of a struggling (once very proud) company in our industy.
As Greg noted, sometimes this industry is their own worst enemy when it comes to PR and marketing. I’ve been in his shoes and it was amazinly difficult to get information out of many RV companies and suppliers. The ones that do it well, do it very well. There is a lesson to be learned there.
While it’s impressive to see Dave Humphreys trumpeting the virtues of National RV, is it really appropriate for the former RVIA president to take such a public stand? Where are the leaders of the company and why aren’t they stepping up to defend any preceived negative press. I respect Dave and his tremendous legacy at RVIA, but unless his role, other than a board member, has significantly change, this is probably not the person that should be waving the flag for National RV.
The press will print what you send them or what is publicly availabe, and that’s what Gred did. I haven’t received any press information from National RV in over two years and bet I’m not alone. I have no idea who the three former Fleetwood executives might be.
I hope the dealers do support National RV, but perhaps there is still some internal support structure that must be repaired before they ask everyone else to do it for them.
April 18th, 2007 at 7:17 am
Brad needs to move on, bring Wayne & crew back. Get back to the Basic’s. ABC of being a Mfg.and supplying dealers with a product that show pride of mfg, sales well, and people belive in it. They have no Heart, they need to feel the wave, they need to understand what they do there. It’s not just a job…
April 17th, 2007 at 10:15 pm
Greg - Sorry that National did not do its job getting out the news. No excuse for that even though the company was under seige at the time. However, we are now ready to cooperate fully. Thank you for taking us up on our offer. We will be in touch ASAP!!!
April 17th, 2007 at 10:10 pm
Tim - Thanks for your support. Over the years I have heard many dealers say that they do not want to have fewer manufacturers to choose from. All of the major players have gone through tough times. I have been impressed in the past to see many dealers rally around a company that was struggling. Their support has made the difference for just about every major manufacturer at one time or another.
My hope is that somehow the good news story about National will be made available to dealers all across America.
National has a long and proud history. It is a good, honest company that has contributed greatly to the success of the industry. It is now in a position to regain its proper place. We have an outstanding team in place,and an excellent game plan that includes very adequate funding.
All I ask is that dealers keep an open mind, listen to our story, understand our situation and give us whatever support they think we deserve.
April 17th, 2007 at 10:04 pm
I agree wholeheartedly that we need to keep National RV from loosing more ground. The industry suddenly lost a manufacturer last year and nobody will win if another is forced to close its doors.
As editor of RV Trade Digest, I stand ready to support National RV by providing “the other side” at any time.
However, the information I used to compile this blog was taken directly from the company’s very own annual report. I can’t get more one sided than that. But, in the interest of fairness, everyone can read the complete document by visiting the SEC’s website.
The bottom of Page 17 of that report does say the company finished 2006 with a 7.3 percent market share, which was a 4 percent increase over 2005. It’s not clear whether that meant National RV improved from 3.3 percent to 7.3 percent or from 7.0 to 7.3. But it was an improvement.
The same paragraph noted the company’s Class A motorhome retail unit shipments were down only 10 percent in 2006, better than the industrywide decline of 13 percent.
David, I will welcome with open arms, the ability to give National RV a chance to tell the RV industry all the exciting news they have to share instead of “using scare tactics based on incomplete information.”
However, I will challenge you to point to a single press release your company has issued that touted exciting news of a positive nature in the past year. Such releases don’t exist on National RV Holding’s website or that of National RV.
Last November, several people outside the company told me I “absolutely had to visit” National RV’s display in Louisville because of their innovative telescoping slideout. I went to the display, approached a group of employees and asked about the new product. The three of them simply pointed down the aisle and returned to their conversation.
Last summer, I approached National RV about doing a cover story about its involvement in an innovative employee training consortium that garnered them an award from the Oregon governor’s office. But, when I tried several times to set up a time to come out and interview the staff and executives — at our expense — the company could never commit to a date.
A scan of my e-mail archive dating back to Jan. 1, 2004, shows that I received two product releases from National RV in 2004, an annual report release in 2005, a release about a couple who survived 17 days in a Dolphin before being rescued (and later arrested on drug charges), and a heart-warming story about the company’s participation in a local Special Olympics track and field tournament.
The Special Olympics story was immediately published on our website and the product releases were published in the magazine. We declined to publish the rescue story following announcement of the couple’s arrest to avoid further negative publicity for the company.
Did I know that National RV hired three talented former Fleetwood employees in the past year? No I didn’t. Did the company send out a press release? Call us to offer an opportunity to interview them? Invite us to their Louisville display to meet with the executives? How about giving us the opportunity to rub elbows with their leaders and dealers at a dealer days meeting?
It’s not as though RV Trade Digest is singling out National RV for negative attention. We are simply working with the material we’re given. If there is a positive story to tell, I wish someone would share it with me — and I’ll be happy to pass it on to the rest of the industry.
April 17th, 2007 at 8:41 pm
Greg - As you probably know, I have served on the Board of Directors of National RV Holdings since retiring as President of RVIA. Your “investigation” was very incomplete and lopsided as is your presentation of the question about National RV’s future.
I can tell you that from where I sit the future of National RV is very bright as long as dealers give us a chance.
Did you know that National RV gained market share during a declining market with very limited funds? When is the last time you saw that in our industry?
Did you know that three very talented and knowledgeable Fleetwood employees joined National in the past year? Have you asked them why they did it?
Selling Country Coach enabled National to pay off almost all of its debt. It takes money to come up with new and innovative products - which are a must in our industry. National is now in a position to make exciting new products available to its dealers. Many models have already been freshened up.
Do you really think it is in the best interests of the industry to encourage dealers to not support a company that has long-standing popular brands? Dealers need to have many manufacturers to choose from. National has a long and distinguished history that should not be lost just because of unfair and lopsided reporting.
Why don’t you give National a chance to let the industry know about the exciting news they have to share instead of using scare tactics based on incomplete information?
April 17th, 2007 at 4:45 pm
In the interest of the RV industry at large, we should all do whatever we can to keep National RV from loosing any more ground. This industry needs to support its better manufacturers like National. Negative press certainly won’t help them return to profitability.